By Marina Rangel |Staff Writer|
Over $2,000 could be resting comfortably in our wallets rather than hiking to the federal government, if only students realized the savings they could be making on their federal taxes.
In a “Tax Talk” hosted by the Osher Re-entry Center on Tuesday Jan. 24, representatives from the nearby H&R Block spoke to students about the student deductions they could be missing out on.
“Students need to be interested in this sort of thing,” said representative Victor Malone, urging the importance of knowing available student benefits in the tax world.
Malone stressed three tax terms: credits, deductions and phase-out. Through credits and deductions, less money is owed to the government and most credits and deductions will phase out, or disappear if income increases.
“I feel like I don’t get enough money back,” said Magda Lopez, one of the students who attended the Tax Talk.
So what are those deductions and credits and what is commonly being overlooked?
The American Opportunity Credit is applied to student expenses like books, supplies and equipment. Up to 100 percent of the first $2,000 and 25 percent of the second $2,000 can be claimed as a credit.
Recently changed in 2009, the American Opportunity Credit is now 40 percent refundable allowing for a maximum of $2,500 back in your pocket.
Sounds complicated, right?
Actually, it is really as simple as claiming out of pocket expenses on books, computers or school supplies and the most overlooked expense, mileage.
As a student, I drive about 94 miles to and from school twice a week and at 50 cents a mile, I could be claiming up to $1,100 for a mileage deduction under the American Opportunity Credit.
“In that hour, I realized so much of the student stuff I never used,” said student Bryant Taylor in response to attending the Tax Talk.
Taylor is former military and is aware of the limitations he has from not doing his taxes himself during that period. He now feels confident that he can get the most from his tax return just from being a student.
Students can also benefit from the Lifetime Learning Credit which applies to tuition and fees paid out of pocket. Interest paid on your student loans can also be used as a deduction, for more information visit 1098t.com.
Not being an expert, it felt great to listen to a tax professional one on one address our concerns as students. This was not the only opportunity to receive free help.
Many businesses offer great tax resources. Specific to H&R Block, anyone is able to schedule a free “Second Look” which gives you an opportunity to go over past tax returns with a licensed tax representative or file a 1040ez for free till Feb. 29.
“Go and talk to someone, just to go through the experience,” said Malone in reference to students doing their taxes for the first time.
Taxes are real life and our lives inside and outside of school are not always cheap. Having the scoop on how to save money is always welcome.